Best Buy 2007 Annual Report Download - page 52

37
PART II
The following table reconciles International stores openat thebeginningand endof fiscal 2007:
Total
Stores at
End of
Fiscal 2006 Stores
Opened Stores AcquiredStores Closed
Total
Stores at
End of
Fiscal 2007
Future Shop 118 3—— 121
Canada Best Buy 44 3—— 47
Canada Geek Squad51—6—
Five Star —8131 4 135
China Best Buy — 1——1
Total Internationalstores 167 16 131 10 304
Note: Duringfiscal 2007, we relocated four Future Shop stores and three Five Star stores. No other stores in theInternational segment were
relocated during fiscal 2007. At the end of fiscal 2007, we operated121 FutureShopstores throughoutallofCanada’s provinces; 47
Canada Best Buy stores in Ontario, Quebec, Alberta, British Columbia, Manitoba and Saskatchewan; 135 Five Star stores throughout seven
of China’s 34 provinces; andone China Best Buy storein Shanghai.
The following table reconciles International stores openat thebeginningand endof fiscal 2006:
Total
Stores at
End of
Fiscal 2005 Stores Opened Stores AcquiredStores Closed
Total
Stores at
End of
Fiscal 2006
Future Shop 114 5—1 118
Canada Best Buy 30 14 — — 44
Canada Geek Squad—5——5
Total Internationalstores 144 24 — 1 167
Note: During fiscal 2006, we relocated six Future Shop stores. No otherstores in the International segment were relocated during fiscal 2006. At
the end of fiscal 2006, we operated 118 Future Shop stores throughout allof Canada’sprovinces; 44 CanadaBest Buystores in Ontario,
Quebec, Alberta, British Columbia, Manitoba and Saskatchewan; and five Canada GeekSquadstores in British Columbia andOntario.
Discontinued Operations
In fiscal 2004, we sold our interest in Musicland. The buyer
assumed all of Musicland’s liabilities, including
approximately$500 million in lease obligations and paid
no cash consideration, in exchange for all of the capital
stock of Musicland. The transactionalso resulted in the
transfer of all of Musicland’s assets, other than adistribution
center in Franklin,Indiana,andselectednonoperatingassets.
On March 25, 2005, we received notification from theInternal
RevenueService (“IRS”) of a favorable resolution of outstanding
tax mattersregarding the disposition of our interest in
Musicland. Based on the agreement with theIRS, we reversed
previously recorded valuation allowances on deferred tax
assetsrelated to thedisposition of ourinterest in Musicland and
recognized a$50 million tax benefitin fiscal 2005.
Additional Consolidated Results
Net Interest Income
Net interest income increasedto $111 million in fiscal
2007, comparedwith net interest income of $77 million in
fiscal 2006. The increase in net interest income was due
primarilyto higher investment yields. Fiscal2007 net
interest income included $11 million of interest expense
related to our financingleases, comparedwith $8 million of
interest expense in fiscal2006.
We recognized net interestincome of $77 million in fiscal
2006, compared with net interest income of $1 million in
fiscal2005. The increase in net interest income was
primarily aresult of higheryieldson investments andhigher
average investment balances. Fiscal 2006 net interest
income included $8 million of interest expense related to
our financingleases, while fiscal 2005 included $21 million
of interest expense related to our financing leases as a
result of correcting our accounting for leases in fiscal 2005.
For additional information regarding net interest income,
refer to Note 7, Net Interest Income, of the Notes to
Consolidated Financial Statements, included in Item 8,
Financial Statements and Supplementary Data,of this
Annual Reporton Form 10-K.
EffectiveIncome Tax Rate
Our effective incometax rate increased to 35.3% in fiscal
2007, compared with 33.7% in fiscal2006. The increase in
the effective income tax rate in fiscal 2007 was due
primarily to a change in the composition of taxableincome
between foreign and domesticentities.